Rent or Buy?  Look Beyond the Numbers

buy or rentBy Larry Kahaner

Every few years, the battle between rent vs. buy a house (and that includes condos) fires up. Now is one of those times. Unlike in past years, however, there are sophisticated on-line calculators designed to help you figure out which is the better deal based on the numbers. Here’s one from the New York Times.

These calculators are excellent sources of information to help you decide, but I think it’s important for people, especially young people, to look beyond the numbers.

One of the non-financial cases for buying is the pride of ownership you feel by owning your own house. You can change the way it looks on the outside and radically reconfigure the inside, too. Another advantage is that you’ve made a statement that you’re sticking with the neighborhood, willing to put down roots for the long term. Not that renters can’t have a long-term commitment, too, but at the first sign of trouble in the ‘hood, renters can book. Not so much for homeowners. Having  a home implies that you will keep your property in tip-top shape: mow the lawn, keep the house looking nice from the outside and doing everything you can to keep your neighbor’s happy. In other words, don’t bring down their property values by keeping chickens in the front yard of your suburban home. Don’t be that guy.

If these characteristics fit you and make you happy then owning a home may be for you.

Renters have an obligation to be good neighbors, too, but it mainly has to do with keeping down the noise, not stealing other people’s delivered newspapers and not acting like a jerk in the elevator. For many of us, that’s about all we feel like doing, and that’s fine.

Renting can be less stressful than owning a house. No worries about heavy snow on the roof, leaks or termites. You don’t have to repair anything that came with your rental. You don’t have to spend weekends mowing the lawn or trimming hedges. If this lifestyle is appealing, then renting may be the best route.

The bottom line is this: Buying and renting both have their pros and cons. Don’t buy or rent just based on what you can afford, the tax implications or any other financial machination. Don’t be bullied by the numbers into making a decision. And definitely don’t be bullied by anyone who says that buying a house will be a good investment. Nobody can predict the future and your particular home may or may not appreciate in value. A lot depends upon when you buy it, what happens to the neighborhood, economic conditions and many other factors.

 

Be sure to factor in the lifestyle you want.

A former Washington correspondent for Business Week magazine, Larry Kahaner is the author of 15 books, including the best-selling Competitive Intelligence, a Book-of-the-Month selection that has been translated into six languages. He has also written Values Prosperity and the Talmud; Business Lessons from the Ancient RabbisThe Quotations of Chairman Greenspan and AK-47; the Weapon that Changed the Face of War. Full bio.

His in-person, interactive, multimedia presentation titled Fiscal Fitness Boot Camp  is available to colleges, universities and companies. You can email him directly at Larry Kahaner.

He is represented by Wolfman Productions, Inc.

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